‎1.12. Exempt market salespeople are not required to be fit and proper. People who have been sanctioned by regulatory organizations or even convicted of criminal offences are able to sell in the exempt market in reliance on the Northwestern Exemption.6

1.13. FAIR Canada urges the other Northwestern Exemption jurisdictions (namely Alberta, Manitoba, Saskatchewan, Northwest Territories, Nunavut, and Yukon) to also repeal the Exemptions without delay. Given the findings of the BCSC as a result of its compliance review, it

Is a figure available regarding the number of Canadians who own mutual funds and the average account size?

- Data from the recent 2012 CSA Investor Index, coupled with population figures from Statscan, suggests somewhere around 12.5 million Canadians own mutual funds. We attach a spreadsheet showing one of our economists' calculations in this respect. Sorry, we do not have data on the average account size.

We also suggest you check with IFIC as we believe they would have an estimated figure for the number of Canadians that own mutual funds. Please check with Jan Dymond, Director Public Affairs, IFIC. She may also have data on average account size.

Is there anywhere a regulation requiring dealers or their Reps to actually provide advice?

- No, there is not a regulation requiring dealers or their reps to provide advice. Registration as a "mutual fund dealing representative" simply allows dealer reps to carry out trades on behalf of clients. Any advice they may provide to clients is limited to suitability advice that is incidental to their dealing activities. This, for example, would allow them to provide investment recommendations to a client based on a KYC and suitability analysis of the client. Advice that goes beyond suitability advice, such as discretionary portfolio management, requires registration as an "advising representative" of a portfolio manager firm registered in the "adviser" category.

Is there a regulatory definition of "advice"? Wrt mutfunds

- No. See my answer above.

Is there a regulatory definition of "trailing. Commission"?

- No. In the Paper, we state that there currently are no rules or guidance that articulate the purpose of trailing commissions or define the services that an advisor is expected to provide in exchange for a trailing commission. We make this point under the issue entitled "Alignment of advisor compensation and services" on p. 11260 of the OSC Bulletin publication. The first topic for consideration in the Paper entitled "Advisor services to be specified and provided in exchange for trailing commissions" (see. p.11268) proposes defining trailing commissions and the services that would be expected to be provided in exchange for their payment.

Who we are The Alberta capital market How the ASC works What the ASC can and cannot do How we are funded Where we are located Important contact information History of the ASC

To find out more about ASC frequently asked questions, check out our FAQs.

Who we areThe Alberta Securities Commission (ASC) is an industry funded regulatory agency responsible for administering the province’s securities laws. The ASC is entrusted with fostering a fair and efficient capital market in Alberta and protecting investors.The ASC regulates the activities in Alberta of the Natural Gas Exchange Inc., the Investment Industry Regulatory Organization of Canada and the Mutual Fund Dealers Association of Canada Along with the British Columbia Securities Commission, the ASC oversees the operations of the TSX Venture Exchange.The ASC is also an administrative tribunal with quasi-judicial powers. Panels consisting of two or more Members of the Commission hear enforcement proceedings and contested applications and consider applications for discretionary exemptions from the requirements of Alberta securities laws. In addition, the ASC sits as an appeal body to hear appeals from decisions of the Executive Director, the TSX Venture Exchange and recognized self-regulatory organizations.

The Alberta capital market

The ASC takes pride in understanding Alberta’s vibrant and successful capital market that is both significant and unique in Canada. We have a strong connection with our Alberta market participants, and their needs and concerns. This understanding of Alberta’s unique business environment is critical to our role in providing a stable regulatory environment.Alberta has the second largest capital market in Canada, representing 28 per cent of the Canadian capital market. Oil and gas companies represent 20 per cent of Canada’s capital market and Alberta-based companies have the highest average market capital in Canada by a wide margin, at $519 million. Oil and gas is by far the most significant industry in Alberta, with 40 per cent of Alberta-based public companies engaged in oil and gas, representing 71 per cent of the total market capital in the province.

How the ASC works

The ASC is a statutorily created corporation and is unlike a business corporation in that it does not have shareholders to whom the board of directors report. Instead, the ASC is accountable to the Minister of Finance and Enterprise and, through the Minister, to the Alberta Legislature.For operational purposes, the ASC is divided into two groups: ASC staff and Commission Members.ASC staff are responsible for the daily operation of the ASC’s corporate affairs and are primarily overseen by the Executive Director, who is also the Chief Administrative Officer. Staff responsibilities include registering persons and companies operating in Alberta’s securities industry, reviewing prospectuses, considering exemption applications and taking enforcement action against persons and companies who have contravened securities laws. Alberta’s Lieutenant Governor in Council appoints ASC Members, the number of which currently stands at 12. Among those Members are the Chair and one or more full-time Vice-Chairs. The Chair acts as the ASC’s Chief Executive Officer and is responsible for the overall operation of the ASC. Collectively, ASC members act as the board of directors and are responsible for overseeing the management of the ASC, approving and amending Rules made under the Securities Act (Alberta) and adjudicating matters that affect the public interest in Alberta’s capital market.

What the ASC can and cannot do

The ASC is authorized to:impose fines known as “administrative penalties” of up to $1 million per contravention of the Securities Act (Alberta), freeze assets and ban from the market those who breach the Act;stop companies or individuals from trading securities during an investigation;stop the trading in securities of a company if it fails to fulfill its obligations under Alberta securities laws; andpursue offenders in the Provincial Court of Alberta as an agent of the Crown, with the power to seek jail terms of up to five years less a day and fines of up to $5 million per offence committed.

The ASC is not authorized to:

get money back for investors;offer investment or legal advice; orcomment on any aspect of an investigation.top

How we are funded

The ASC is funded by the combination of revenues received under Alberta securities laws from market participants (e.g. fees) and its own investment income.

Where we are located

The ASC is located in downtown Calgary in the West Tower of Centennial Place: Suite 600, 250–5th St. SW Calgary, Alberta, T2P 0R4

"They invested a lot of money with CITC in Quebec and they lost it," Mockler said.Pete Mockler, a Fredericton lawyer, said the New Brunswick Securities Commission did not do enough to protect investors from an alleged ponzi scheme. (CBC)

"The securities commission were aware for a long time of the potential for this loss and failed to notify them or indeed to even take action against CITC until it became too late to do so."

The lawsuit centres around an alleged ponzi scheme that dates back to 2006 and involves two Quebec companies.

Three New Brunswick men have been accused of selling shares to investors, then using that money to pay other, prior investors. These alleged actions were being done while the company was properly registered with the securities commission.

The lawsuit claims the securities commission investigated, but failed to find any wrongdoing.

Quebec agency found problems in 2007Even in 2007, when their counterpart in Quebec found the companies had violated the law in that province, the New Brunswick Securities Commission didn't tell the investors in New Brunswick and it didn't freeze the company's funds before it went bankrupt.

Michelle Robichaud, a spokesperson for the New Brunswick Securities Commission, said it's not unusual for investigations to take several years.Rick Hancox, the executive director of the New Brunswick Securities Commission, is named in a lawsuit filed by 54 investors over the commission's handling of an alleged ponzi scheme. (YouTube)

And Robichaud said the CITC case was a complex, inter-provincial investigation.

But the commission's spokesperson wouldn't comment on the allegations in the lawsuit.

"I think once again it's important to note that we just received those allegations and we need to ensure we do take the time to review and evaluate and make sure we're able to respond," Robichaud said.

The plaintiffs are seeking $5.6 million, plus interest dating back to 2007, as well as costs associated with the lawsuit.

Meanwhile, the commission's case against the three men allegedly involved in the ponzi scheme still hasn't been dealt with.

There was a hearing Tuesday morning, dealing with some preliminary matters but that's been adjourned. Robichaud said it won't likely be dealt with until later this summer.

The lawsuit alleges the securities commission concluded CTIC was conducting a ponzi scheme in 2008 but took no action to correct it.

"By the time action was taken by the [securities commission] to stop it, the total investments were estimated to be in excess of $14 million of which $6.4 million comprised the investments of the investors," the lawsuit alleges.

The lawsuit also says the securities commission "knew or should have known" about the problems with CITC by July 2007 and they had a duty to warn investors and "they deliberately and negligently refrained from advising them of the danger to their investment and potential for loss."

Subject: Huston Loke, Former President of DBRS, is Becoming the Director of Corporate Finance at the Ontario Securities Commission

Huston Loke, the former President of DBRS, who was responsible for the inflated credit ratings and failure to disclose the US subprime mortgages and leverage within the Non Bank ABCP, is becoming the new Director of Corporate Finance at the Ontario Securities Commission. See this morning’s National Post article on his appointment below.

If you disagree with the appointment of Huston Loke, please express your opinion to one of the executives at the OSC noted below.

Huston Loke, the former president of rating agency, DBRS Inc., is set to become the director of corporate finance at the Ontario Securities Commission.Loke, who left DBRS in mid-May after a long career at DBRS, starts on Nov. 5. At DBRS, Loke, who started at DBRS in 1995, was replaced by Dan Curry, who at the time was head of the firm’s U.S. operations. At the time, DBRS said that the “reorganization is intended to more fully integrate DBRS senior management and staff to assist in ensuring global regulatory, business and market alignment.”

Loke replaces Leslie Byberg who is moving to a new position at the OSC. He will report to Maureen Jensen, the OSC’s executive director.

On its web site, the OSC said the corporate finance branch “administers the regulation of companies that offer their securities for sale to the public in Ontario. It also leads OSC policy initiatives related to the regulation of public companies and plays an active role in policy initiatives of the Canadian Securities Administrators.”

The web site notes that corporate finance branch monitors compliance with the regulatory framework laid down for securities offerings in Ontario’s public and exempt markets. “In general, Branch staff review prospectuses, other offering documents and applications for exemptive relief from Ontario securities laws filed by issuers. Certain filings are selected for review and reviews are conducted by Branch staff using a risk-based approach,” added the web site.

In addition to covering all issuers of securities (be it debt, common equity or preferred shares which typically file a prospectus and which is then reviewed ) in Ontario, it also covers the exempt market (that part of the capital raising process dealing with accredited investors) disclosure around mergers and acquisitions, corporate and securitization disclosure and rating agencies.

“I am looking forward to working with Howard [Weston, the OSC chair] and the team. The opportunity matches very well with my interests, background and experience.”

Asked for the difference between his former position, of running the country’s only domestically owned rating agency, an agency that rates all sorts of debt and structured products, and his new position, Loke mentioned “disclosure rules and mergers and acquisitions.”

Loke added that while the business environment is different, “in terms of the nature of the work and who the stakeholders are there are lots of similarities.”

Diane Urquhart, an independent financial analyst, said she was “surprised by the OSC decision to hire the former president of DBRS to become the gate-keeper for corporate new issues and regulation of the credit rating agencies.” Indeed Urquhart wonders “why the OSC hired a person from the agency which gave the top credit rating to the about $35 billion of non-bank asset backed commercial paper market which froze more than five years ago. It’s a strange decision by the OSC,” she said.

Urquhart is of the view that “all credit rating agencies, both here and abroad, failed to protect investors from the unsafe investment products prior to the global financial crisis. The Canadian-style liquidty agreements, didn’t protect issuers and investors, but were given the highest credit rating by DBRS. Both S&P and Moody’s were unwilling to give the paper an investment grade rating.”

Britain’s financial regulators are still asleep and more scandals could follow, warns Prem Sikka

by Prem SikkaWednesday, October 3rd, 2012The banking crash exposed the “London loophole” – a phenomenon associated with feather-duster regulation and ideology where regulators do little to check predatory practices. Nearly five years on and despite vast bailouts, the regulators in Britain have shown little backbone or interest in cleaning-up predatory capitalism.

Rather than taking responsibility, the United Kingdom is dragged along by others. Recent exposure of money laundering and London Interbank Offered Rate (Libor) are just the latest manifestations of a crisis which shows that this country lacks the structures and the political will to curb predatory capitalism.

Any mention of effective regulation sends corporate elites into a cold sweat. They use their chequebooks to fund political parties and find jobs for former and potential ministers with the aim of stymying regulation.

They refer to the bogey of higher costs of regulation, even though the absence of effective regulation has resulted in an unprecedented economic crisis.

The elites forget that the state is the ultimate sponsor of capitalism, and has to coerce and cajole corporate beasts to curb their self-destructive tendencies. That lesson has been learned in the United States, supposedly the home of free markets, but not in Britain. Here are some recent examples.

In August 2012, the New York New York State Department of Financial Services claimed that, for 10 years, the Standard Chartered Bank schemed with the government of Iran and hid from regulators roughly 60,000 secret transactions, involving at least $250 billion. It collected millions of dollars in fees, but left the US financial system vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes, and deprived law enforcement investigators of crucial information used to track all manner of criminal activity.

The report added that the bank carefully planned its deception and was apparently aided by its consultant, Deloitte and Touche, which intentionally omitted critical information in its “independent report” to regulators. Standard Chartered has agreed to pay a fine of $340 million. Britain’s regulators have done nothing.

In July 2012, a 300-page report by the US Senate Permanent Subcommittee on Investigations said that HSBC circumvented banking rules designed to prevent financial dealings with Iran, North Korea and Burma. Its lax systems and controls also facilitated financial movements for drug cartels and terrorists. The bank is accused of failing to monitor some $60 trillion of transactions.

HSBC has paid $27.5 million in fines to Mexico and may be fined around $1 billion by the US regulators. The revelations should have resulted in probes in the UK, too, but there is no sign of much action, aside from a belated report into the Libor rate rigging scandal concluding that the system is broken and suggesting its complete overhaul, including criminal prosecutions for those who try to manipulate it – things most observers had concluded rather earlier.

In June 2012, the US regulators took the lead in exposing the Libor scandal. Barclays Bank paid a total fine of £290 million, including

£59.5 million to the UK’s Financial Services Authority, to settle allegations of manipulating Libor and the Euro Interbank Offered Rate (Euribor) lending – the rates at which banks lend to each other in the wholesale money markets. Citigroup, Deutsche Bank, JP Morgan, UBS, HSBC and the Royal Bank of Scotland are also thought to be on the US regulators’ radar.

With its reputation irrevocably tarnished by the banking crash and its imminent replacement by the Prudential Regulation Authority and the Financial Conduct Authority, the FSA now claims to be looking at some banks, but so far there is no tangible evidence of this.

The UK is a soft touch compared to the US where the Securities Exchange Commission and Department of Justice have shown some willingness to investigate, prosecute and fine corporations, although the scale and severity of this have been insufficient to curb predatory capitalism.

In contrast, the UK regulatory impulse is to protect elites by sweeping things under dust-laden carpets. A couple of examples serve to illustrate these points.

Sani Abacha, the late Nigerian dictator is estimated to have looted between $3 billion and $5 billion of public money. Despite the extensive anti-money laundering legislation, most of the loot ended up in Western banks. Around $1.3 billion is estimated to have passed through 42 bank accounts in London. Unlike Switzerland and even Jersey, the British Government has neither named the banks nor repatriated the stolen money.

The Bank of Credit and Commerce International was the biggest banking fraud of the 20th century. The Bank of England, then the banking regulator, closed it in July 1991.

Some 1.4 million depositors lost around £7 billion of their savings. In the US, Senate hearings were held and the CIA published some of its reports on BCCI’s activities. A US Senate Committee report concluded that the Bank of England and BCCI auditors Price Waterhouse (now part of PricewaterhouseCoopers) were engaged in a cover-up”.

It also released 99 per cent of a report, censored by the Bank of England, codenamed the Sandstorm Report, which described some of the frauds and named the wrongdoers and various movers and shakers.

However, the Sandstorm Report has remained a state secret in the UK. Various parliamentary committees held hearings on the

BCCI scandal, but none were given sight of the Sandstorm Report.

Last year, after some five-and-half years of legal battles against the Treasury and the Information Commissioner, I managed to secure the names of the wrongdoers and some related parties.

These included members of the Abu Dhabi royal family, prominent Middle East businessmen, the head of Saudi intelligence, prominent political advisors and even the biggest funder of al Qaida, then considered to be an organisation friendly to Western interests.

Evidently, the British Government prioritised the appeasement of commercial interests over its citizens’ right to know, or even the desire to create effective banking regulation.

The UK lacks an effective regulatory system and a political culture to curb predatory capitalism. Its patchwork quilt of regulators includes the Financial Services Authority (and its successor bodies), the Bank of England, the Serious Fraud Office, Her Majesty’s Revenue and Customs, the London Stock Exchange, Office of Fair Trading, Financial Reporting Council and myriad private sector regulators.

They are poorly equipped to call multinational corporations to account.

With an annual budget of £37 million, the SFO is incapable of mounting effective corporate prosecutions. In contrast, the US SEC has an annual budget of $1.3 billion.

Almost all of Britain’s watchdogs come from the private sector and are usually too sympathetic to the games played by corporations. After a stint as a regulator, they return to the private sector and know the hands that they must not bite.

The UK’s patchwork system encourages duplication, buck passing and obfuscation. And it is hard to think of any timely intervention by any regulator.

Britain needs to replace the ineffective patchwork of regulators with its own equivalent of the SEC, which could be called the Business and Finance Commission. This would need to be controlled by a board representing a plurality of interests, including taxpayers, employees, customers and other stakeholders, so that elites could not easily sweep matters under the carpet.

The board should be required to meet in the open and its files should be publicly available so that we could all judge its efficiency and effectiveness. No document should be withheld from parliamentary inquiries into scandals.

All political parties need to recognise that additional financial and human resources are needed for swift investigation and prosecution of corporate misdemeanours. Without change, the UK will not have an effective regulatory system.

http://www.youtube.com/user/investoradv ... ature=mheeA dozen videos on the Canadian state of grossly negligent regulators. Examples of damages to Canada of as high as one billion dollars per week "laundered" from public hands into private hands, with the aid of 13 captured securities commissions.

This is a curious settlement :On August 16, 2012 ,the Nova Scotia Securities Commission approved a settlement agreement with a mutual fund salesperson. John George Frederick Campbell admitted he violated Nova Scotia securities laws by falsifying a client's document and by keeping a blank signed letter of authorization on file. According to the NSSC ,his actions undermined investor confidence in the fairness and efficiency of capital markets.

At the time, Mr. Campbell was a mutual fund salesperson with BMO Nesbitt Burns Inc. Mr. Campbell accepted responsibility for his conduct and was co-operative with commission staff. He also took voluntary actions in order to be accountable for his wrong doings. The Commission approved the settlement agreement and ordered Mr. Campbell to pay an paltry administrative penalty of $7,500 and pay costs in connection with the commission proceedings of $5,000. Mr. Campbell was also required to reimburse BMO Nesbitt Burns Inc. in the amount of $4,240.14 for the loss suffered by his client associated with the client's attempt to transfer the account. The settlement lists a number of mitigating factors but not one aggravating factor. http://www.gov.ns.ca/nssc/docs/nohcampbell17082012.pdf

His registration history: (a) From March 14, 2003 to Jan. 28, 2009, inclusive, with BMO Nesbitt Burns Inc [ His employment with BMO Nesbitt Burns Inc. was terminated for cause on Jan. 28, 2009 as a result of his actions (b) Less than 3 months later , from April 17,2009 to Oct. 31,2010, inclusive, he was with Scotia Capital Inc. [ During the period Oct. 31, 2010 to March 22, 2011, the Respondent resigned from his employment with Scotia Capital Inc. and voluntarily revoked his registration pursuant to the Act to pursue other opportunities.] (c) During the period March 22, 2011 to present, inclusive, with Scotia Securities Inc. Mr. Campbell is currently registered as a Dealing Representative (Mutual Fund Dealer) and a Branch Manager (MFDA Members only) (Mutual Fund Dealer) with Scotia Securities Inc.

Here is a good look at how regulators help steal the country blind, from Britain.......

Posted by Ian FraserStudiously ignoring the roles of “establishment” figures like Sir James Crosby and Lord Stevenson in the demise of disastrous Edinburgh-based bank HBOS, the Financial Services Authority is seeking to heap all the ordure on the less establishment figure Peter Cummings.Now I am not suggesting that Cummings is in any way innocent — he most certainly is not — but this is a travesty of regulation. The wholly conflicted regulator has addressed the problem with a pre-ordained mindset — one of ”wagon circling” and “let’s exonerate our friends and those who still wield political influence”.It only interviewed Crosby’s successor Andy Hornby for four hours and only interviewed the HBOS chairman Lord Stevenson for two hours. It failed to interview any of the finance directors responsible for the carnage at HBOS (respectively Mike Ellis, Paul Tucker, Phil Hodkinson and … Mike Ellis), nor did it interview the head of the risk panel in the corporate division Sir Ron Garrick, nor the finance director of the corporate division Alistair Webster. It’s approach to covering up crimes and misdemeanours in Britain’s failed banks really has to stop. It is outrageous, nauseating, morally repugnant and makes proper reform impossible.Here’s what financial journalist and author Ray Perman had to say about it in today’s Scotsman:-It is inconceivable that [Cummings] caused the collapse of the bank on his own. The FSA’s own investigation showed that his own profit targets were constantly being pushed upwards by the bank’s top management in their quest for relentless growth. Yet none of his superiors is even named by the FSA, let alone criticised or fined … It wasn’t only corporate loans that brought down HBOS. Billions were lost in mortgages which could not be repaid, in American securities which turned out to be worthless, in Irish property deals, and in compensation … paid to people mis-sold Payment Protection Insurance. Cummings was not responsible for any of them, yet the people who were have not been held to account.The Canary Wharf-based regulator attempted something similar with its December 2011 report into the failure of the much bigger Royal Bank of Scotland (see my Huffington Post article).I believe the time has come to tell the body’s chairman Lord Turner (pictured above) that we’re no longer prepared to tolerate its ”three monkeys” approach to regulating the banking sector or its kneejerk attempts to sweep the crimes and misdemeanours of banks and bankers that it failed to regulate during its “captured” years under the carpet.As the so-called HBOS whistleblower Paul Moore and others have made clear, we are never going to get to the bottom of the UK banking failures if the FSA — a 100% conflicted regulator given its complicity in every UK banking failure, and given the fact that the former HBOS chief executive Crosby was on its board from January 2004 until February 2009 — has anything to do with it.We need an independent, judge-led public inquiry. The inquiry must examine and bring out all the key public policy points — including the failures of the bank’s boards, audit committees, other corporate governance and risk management structures, auditors (especially Deloitte, KPMG and PWC), the FSA, the Bank of England, H.M. Treasury (which is was also largely “captured” by the investment banking industry under New Labour) and the British Government. Only then will these tawdry cover-ups and attempted whitewashes stop.It’s time the UK authorities learnt the lessons of Hillsborough. Eventually, the truth will out.In an email to the Financial Times, Karl Capp, whose media business suffered as a result of HBOS’s rampant abuse of the Small Firms’ Loan Guarantee Scheme last decade, said:-“The person who actually set the strategy, before he unexpectedly ‘retired’, was Sir James Crosby. Ironically, Crosby had become a non executive of the FSA in 2004 and FSA deputy chairman in 2007. It beggars belief but he was able to view HBOS from his FSA position in parallel with running the bank.Cummings’ fine relating to the two year period 2006 and 2008 is farcical. This is actually when the bank started foreclosing on businesses after they had saddled them also before 2006 with calamitous products and loan conditions. In his book Hubris: How HBOS Wrecked The Best Bank in Britain Ray Perman cites Andy Hornby for the HBOS debacle, yet Hornby was only appointed CEO in July 2006 as Crosby retired (somewhat early as I indicate) and Cummings had been appointed by Crosby in January 2006. The culture and calamitous strategy was deep-rooted. Hornby has much to answer for but the design had been signed off and set some years before. Hornby had been saddled with a monster and I do agree that he outsourced his regulatory risk nicely.Those that will be charged and prosecuted through the ongoing Thames Valley Police investigation [into massive fraud in Cummings's divison] will be individuals where it can be proved they criminally and financially gained from this disastrous strategy and corporate environment. In addition to this, senior executives at the bank profited in other ways. Gain was through bonuses, careers and taking perceived permitted advantage out of a fabricated lending environment — there is a comprehensive list.Corporate recklessness ruined great businesses and business models and compensation is due. Analysing the Cummings decision in this regard will take some time to evaluate. Has the regulator, and therefore the bank, found its scapegoat? I think not as it further incriminates the bank. Cummings was oiling the bank, fuelled by board pressure and it was tough for him to find the stop button and this is why he accuses FSA of ‘tokenism.’ An unscrupulous man but he’s spot on.”Separately, Paul and Nikki Turner, whose music businesses were among the 50-200 companies that were wilfully destroyed as a result of Bank of Scotland Corporate Reading fraud, wrote a letter to FSA managing director Martin Wheatley on September 6th. In it they said:-We would like to know why the FSA, in the full knowledge of the gravity of this situation, has taken no action whatsoever against any authorised person from HBOS or LBG who has had any involvement in [the BoS Reading fraud, where charges are due to be pressed following a two-year investigation by Thames Valley Police imminently]? And why the FSA appears content to let the Bank continue to leave its customers in limbo and without the compensation they are clearly due?We were definitely led to believe our personal situation would have been over before the summer of 2012. Instead the summer is over and we are in a worse position than we were in even in April, while all the parties who have wilfully caused this situation to continue post the resignation of Lynden Scourfield in April 2007, have faced no penalty from the Regulator at all.It is a fact that Peter Cummings, Lord Stevenson, Andy Hornby, the Board of HBOS (2007), Eric Daniels, Philip Grant, Sir Win Bischoff and, more recently, Juan Colombas and Antonio Horta-Osorio, have not only breached the FSA Principles by acting without integrity and refusing to treat customers reasonably and fairly, they have also attempted to pervert the course of Justice, by concealing criminal activity in their Banks.While we appreciate you cannot do anything about the latter situation and this will have to be dealt with by the police after the conclusion of the present investigation, we would like to know what, if anything, the FSA intends to do about the breaches of the FSA Principles? By doing nothing, the FSA are currently allowing this scenario to get much, much worse for the victims and we do not understand how the FSA can either sit on the side lines or/and seemingly condone such conduct?I covered the token punishment meted out to Cummings in more detail in an article published yesterday in the Sunday Herald (see McColl and Hunter attack FSA’s ‘disgraceful’ treatment of HBOS’s Cummings). Here are some excerpts from other Sunday newspaper coverage of the FSA’s attempt to scapegoat Cummings.The Observer (leader article)The public … could be excused for wondering whether it can possibly be true that Cummings is the only man to blame … It shows a serious flaw in the system set up by Gordon Brown that the regulator is responsible for producing a report into what went wrong at a firm it failed to regulate properly.For all that Brown did to bring Britain’s banks back from the brink of collapse, he made a mistake in not launching a full-blown inquiry into the debacle. Yes, the Treasury select committee, then chaired by John McFall (since ennobled), did what it could to call Goodwin et al to account. Yes, Lord Turner conducted his review of regulation. But the public’s need for top bankers to pay a price has not been satisfied.The FSA’s tome on the collapse of HBOS … must do more than rehash the investigation into Cummings and the Bank of Scotland corporate division he ran. There is an outside chance it could lead to the FSA embarking on more regulatory actions, but it seems unlikely. Nonetheless, this is probably the FSA’s last chance to salvage some credibility before it disappears in the coalition’s carve-up.The Sunday Times (Ben Laurence)Intriguingly, it was on Crosby’s watch that a whistleblower within HBOS was sacked for warning that some of the bank’s activities were becoming too exposed to potential defaults by borrowers.Crosby was a non-executive director of the FSA from 2004, and became its deputy chairman in November 2007. He quit the watchdog in February 2009. It was almost exactly around this time, in early 2009, that the FSA started its proceedings against Cummings. What about Andy Hornby, the Oxford and Harvard Business School-educated whizzkid who took over from Crosby as HBOS chief executive and held the post until the Lloyds takeover? Hornby was pushy and ambitious for the bank. While he was in charge, Cummings was being pushed to increase lending and profits from his part of the HBOS empire.And then there is Lord Stevenson, who chaired HBOS from its creation until its takeover — the entire time that HBOS was building a reputation as a lender that was prepared to be bold and then falling into ruin as that boldness was revealed as recklessness. None of these men has been subjected to the disciplinary action that Cummings found so irksome.Mail on Sunday (Jeff Prestridge)Although there is no doubt he was responsible for engendering at HBOS a ‘culture of aggressive growth without the controls in place to manage the risks associated with that strategy’ (the regulator’s words), Cummings is carrying the can, not just for his own failings but for others. What about the role of the HBOS board, which sat idly by while this aggressive growth culture was allowed to breed faster than a colony of rabbits? Isn’t it culpable? Shouldn’t it be fined?More important, what was the FSA doing while Cummings handed out corporate loans like confetti? Wasn’t it meant to be regulating the bank? As a result, isn’t it also partly to blame for HBOS’s aggression? As Cummings said, the FSA acts ‘as lawmaker, judge, jury, appeal court and executioner’. He’s dead right. A theme in recent financial scandals (Arch Cru and Keydata especially) has been the regulator’s willingness to blame everyone else for their part in the ensuing chaos. If the regulator had been doing its job properly, Arch Cru and Keydata would not have become the damaging affairs they grew into (it should never have allowed the products to get off the ground).Similarly, an effective regulator would have reined in Cummings’ lending excesses long before they began to harm HBOS. Regulators must be effective, which the FSA isn’t. They also need to admit their mistakes, which it is incapable of doing. Finally, and crucially, they must be accountable for their (lack of) actions. As Cummings says, the FSA isn’t. It’s a law unto itself.Short URL:http://www.ianfraser.org/?p=8045

Posted by Ian Fraser on Sep 17 2012. Filed under Blog. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

CBC News Nearly two-thirds of penalties levied by provincial securities regulators across Canada in the past five years have not been paid, a CBC News investigation has found.

"Clearly we have a problem with collection of fines and [securities] regulation," said Ermanno Pascutto, executive director of the Canadian Foundation for Advancement of Investor Rights (FAIR Canada).

"I think it's important that people who break the rule actually be sanctioned," he said from his Toronto office.

In analyzing data supplied by all provinces, CBC News found that only 35.7 per cent of the penalties owed for violating securities laws across the country since 2007 was actually collected by the commissions.

That means of the $444 million in penalties levied, $285 million has not been paid.

George Schwartz, a man who still owes thousands of dollars in penalties, questions the whole system.

"It's all a farce. That's what I'm trying to tell you. And people take it to be a farce and the regulators are not enforcing it," said Schwartz, the former president of a defunct Ontario company that has been fined by regulators.

Said Pascutto, "I expect that the rule-breakers already know that most of the fines are not paid. The important thing is that the people of Canada become aware that the system is not effective in collecting fines."

Penalties can take the form of fines, investigation costs, settlement agreements, and repayments of ill-gotten gains by people or companies found violating securities laws.

Quebec had the best rate of collection, at 77 per cent, while British Columbia had the lowest rate, at 2.9 per cent.

The B.C. Securities Commission (BCSC) says collecting fines is difficult because violators often skip town, run out of money or end up in jail.

Investor lost thousands to fraud

B.C. resident Eleanor Thielke said she lost thousands of dollars in a case that went to the BCSC.

Ronald James Conn was a registered mutual fund salesman who convinced Thielke in the 1990s to invest in the Mindoro Gold Mine in Oregon.

After the mine turned out to be a fraud, the BCSC fined Conn $50,000, because, as an experienced mutual fund salesman, he had an obligation to prevent people from buying into it.

"I didn't know he hadn't paid the fine until CBC told me," Thielke said in an interview at her home in Halfmoon Bay, B.C.

"There obviously isn't any deterrent factor here. None," she added. "I mean, I dare say he would do it again. What would stop him?"

Conn is once again in trouble with regulators and police for illegally trading shares in Follicles, a company involved in the manufacture of a hair restoration device.

Conn appeared in provincial court in Vancouver on Tuesday. The charges against him include 14 counts of criminal fraud and 132 breaches of the B.C. Securities Act.

"It's unbelievable. Unbelievable. I'm speechless," Thielke said.

Recovery is limited, says association

Provincial securities commissions across the country refused requests for interviews, but the Canadian Securities Administrators, an umbrella organization that represents them, issued a statement to CBC News.

"Regulators make every reasonable effort to collect monetary penalties, including using the services of collection agencies and registering judgments against assets," Bill Rice, the association's chairman, said in the statement.

"Recovery is often limited as a significant number of cases involve serious fraud where there is little or no likelihood of ever collecting the money," he added.

"Where appropriate, regulators pursue charges in the courts, either on their own or through a Crown prosecutor where jail terms can be imposed."

But CBC News has found that even those who are targeted by the regulators are questioning their efforts to collect.

Schwartz is the former president of Euston Capital, a now defunct Ontario company that has been sanctioned in several provinces.

"It's the commissions that fail to take the practical steps to recover the money," he said from his home in Maple, Ont.

"There's no terms of repayment. There's no terms for when this amount becomes due, and it's basically a fake IOU."

'I feel duped'

Schwartz said securities commissions often take too long to investigate and discipline, so by the time the fines are levied, years have passed and there is no money left.

Schwartz said he cannot pay his fine because he's nearly "penniless."

"If they're not making an effort to collect it from me, I'm not going to be 'Johnny B. Good' and walk up to the cashier and pay them the amounts which I couldn't pay anyway," he said.

That lack of collection is still a sore spot for Randy Gelsinger, a Manitoban who lost the $6,000 he had invested with Euston Capital.

"If they don't want to pay, they don't have to pay. It's a terrible way to do things, but that's just the way the Canadian justice system works," said Gelsinger, who runs a small business in Swan River, Man.

Gelsinger's investment, which was to go into the cross-border pharmaceutical trade through Euston, turned out to be a harsh lesson for him.

"I feel duped. Like my wife said, 'If it sounds too good to be true, then it probably is,'" he said.

"My wife just said, 'Told you so!' And that probably hurt more than anything."

More effort needed in collections

Gelsinger said people who fleece investors should be sent to jail, in addition to paying fines and repaying investors.

FAIR Canada's Pascutto said securities commissions need to put more effort into collecting. One solution, he said, could be to hire outside companies that specialize in collections.

Pascutto said transparency is also important, suggesting that commissions should publish the names of those who do not pay their penalties.

Ontario and British Columbia are doing that, and starting next month, New Brunswick will begin publishing unpaid fines in its annual report.

The collection rates vary widely from province to province, and those lower than the national rate (35.7 per cent) include:

- New Brunswick at 17.3 per cent.

- Saskatchewan at 22 per cent.

- Manitoba at 24.2 per cent.

- Nova Scotia at 29.2 per cent

- Ontario at 31.2 per cent.

Alberta was above the national collection rate at 51.6 per cent.

New Brunswick Justice Minister Marie-Claude Blais said collecting fines is difficult because the companies are often outside the province or the country.

Blais said that's less important than recouping the money New Brunswickers invest.

"Government has always found it very important that those victims are first and foremost considered, and that we have services for these victims," she said.

"One of the fines last year was a million dollars - so hard to recoup when it's a complicated scheme and people are out of the country," she added.

National regulator suggested

Pascutto said having a national securities regulator in Canada might help with enforcement and collection efforts.

"We have done a very poor job in this country, and that is one of the major criticisms within the country and internationally about Canada's approach to enforcement with financial crime," he said.

In B.C., Thielke said, regulators need to find a way to get tough with those who don't pay their penalties.

"A slap on the wrist, and off you go again. I mean, people should go to jail," she said.

A judge, a military man, and retired RCMP officer walk into a bar in Alberta...............

there is no joke here, but I had to start somewhere. I am currently in discussion with a soldier and a judge at the moment however, and funny story, they both thought that there was no way their retirements were at risk due to financial industry misconduct.......because they "have a pension".

(ignoring for the moment that the soldier has lost money in Concrete Equities........)

I remembered Canada's top investment consulting analyst, Diane Urquhart, of Toronto, wrote extensively about how the public service pension plan has lost a billion or two in 2009ish due to buying "magic beans", or investments which had no redeemable value, but were allowed to be sold to people with the help of legal exemptions granted by various Canadian provincial securities commissions..............

I will get to the point..........I promise.

When I did the research and uncovered about $2 billion had gone into these "magic beans", at PSP investments, I added it to the approx $1.5 bil in "exempt market products either failed or failing in Alberta at the moment......and the $1 billion the Alberta government lost when the Alberta Treasury Branches put 47% of every deposit dollar into these things......and here is the punch line

A judge, a military man, and a retired RCMP officer walk into a bar in Alberta...............and learn that the three of them have been financially raped, in secret (kind of fraud-like:) and possibly a fourth and a fifth time if I were able to interview them each in greater detail........and look at their personal investments. You see, each of these individuals has a pension with the Public Service of Canada (PSP pension)

No joke yet.

And the irony of ripping off the judges pension plan, is that judges gave the perpetrators of this fraud immunity from civil prosecution (they had also applied for immunity from criminal prosecution.......but we have no police in Canada doing this work so........nevermind).......judges gave them immunity from any liability......while they ended up robbing judges, and soldiers, and postal workers, and taxpayers, bank customers and you ............The further irony is that the securities commissions who allow such ripoffs (exempt products, exempt from our laws, exemptions to our laws) to occur on a near daily basis, the irony is that most securities commission people seem to be lawyers.Adding insult to injury is that when the RCMP IMET top guns seek to prosecute the highest level financial crimes, they have members of the investment industry and securities commission members on joint management committee's inside the RCMP IMET. These kind folks help the RCMP to close the file and write up fascinating apologetic reports making it appear as if stealing $32 billion dollars is truly unfortunate, but not criminal.....or words to that effect.

Ain't financial self regulation great? No criminal codes applicable!

================================

Notes, links, data, sources pasted below in no order and without regard for order, coherence, relevance or pretty:======================================================================================

Urquhart believes the restructuring process allowed banks to skirt their responsibilities since they were not required to buy the ABCP back from investors.

"No Canadian banks required a government bailout because they had sold the toxic asset backed commercial paper from their inventories to their customers and because they were not forced to buy this bad paper back like the other banks of the world were required to do," she says. "Also, unlike in other countries, the Canadian bankruptcy courts gave full immunity from lawsuits by the ABCP owners against the Canadian banks and investment bank distributors of this toxic product. So, it was not the Canadian banks that took massive write-downs, but the customers of the Canadian banks and investment banks."

(these investments are those which fund the pensions of public servants in Canada like Judges, RCMP, postal workers, etc.)

“Think of the irony of losing nearly 1/4 of the judges and the RCMP members pension fund, while gaining immunity from civil prosecution from these same judges, and having the ability to sit on joint management committee within the RCMP to help close the criminal file on the scam.......high level systemic fraud is the best paying game in Canada.”

============

MANDATEPSP Investments is a Crown corporation created in 1999 by Act of Parliament (the Public Sector Pension InvestmentBoard Act, or the “Act”). PSP Investments’ mandate is twofold: managing the funds transferred to it by theGovernment of Canada for the Canadian Forces, the Reserve Force, the Public Service and the Royal CanadianMounted Police (“RCMP”) pension plans in the best interests of the contributors and beneficiaries; and investing itsassets with a view to achieving a maximum rate of return without undue risk of loss, having regard to the funding,policies and requirements of the Plans and their ability to meet their financial obligations.

=======================

Page 92 of this 2009 report shows approx $2 billion was invested into the “magic beans” of toxic sub prime mortgage investments......which did NOT meet Canadian Securities Acts and received from each securities commission in each province that sold them. (this in the PSP pension investment account)

go here http://youtu.be/aNh5laKO22o if you need the "ground up" primer about securities commissions helping to rob Canadians through the use of legal tricks.

http://youtu.be/aNh5laKO22o This link contains a 32 minute video describing some of the thousand other ways that securities commissions have sold out the public protections of Canadians, while enriching themselves and financial interests in the process.

"The seventh crime was watching the RCMP get involved, who then invited in their Ontario Securities Commission (OSC) person who "advises" them on large scale financial crimes. (did I mention this OSC gave the fraudsters the permission.......?) The file was quickly closed without interview of experts or expert information who offered help to understand the crime."

"The eight crime was letting OSC persons help the RCMP close the file and write their final report, despite having twice been given official complaint of criminal code violations by this same OSC in the granting of the legal exemptions (Breach of Trust, sec 122) The RCMP, in a naive fashion that some have come to expect and some find quite insane, actually allowed persons named to be criminally complicit in a $32 billion dollar theft, to participate in the investigation and final report of the $32 Billion dollar crime. Such power and trust that the "reputation protection system" for this money industry has in our Canada. "

"The ninth crime, is that while the RCMP lets members of the OSC and other self regulatory bodies onto their joint management committees, to share with them information and help "solve" the crime, when the reverse is required, the RCMP do not even have the ability, nor the right to even ask the OSC, or other bodies representing investment dealers, to share with the RCMP details of their own investigations, fines, and/or any information. A one way street exists, allowing the most trusted fraudsters in Canada INTO the RCMP and nothing OUT for benefit of the RCMP."

I could go on, but it seems to be enough for now. Your pension plan was robbed robbed. Your Canadian economy was defrauded. Your "Harper" government bailed out Canadian banks up to $186 Billion with your money (in secret no less) Judges (public service pension) robbed, postal workers, University of Calgary, Governments from top to bottom (again your tax dollars chipped in) two or three suicides resulted, depression, mental anguish, domestic problems, alcoholism, etc. Minor detail for a big operation. "Thanks for the money Canada". We will be back in a month or two with another "great idea" for you. Signed, your Canadian Bankster.

Don, don't the lines highlighted in red speak of saying one thing......and then doing exactly the opposite of what they said (I apologize if this was your original point)

Not to mention the billions of exemptions already suffered by investors outside of the "exempt" market. WTF!!!! These guys are pathalogical liars and selling out everyone they purport to protect, for their own little party.

For those who research this kind of thing, I think you will find that this government agency is playing both sides of the street and playing it to their maximum advantage, regardless of the public interest. See other posts in this forum for further and visit http://www.investorvoice.ca for historical background.

Designed to Fail: Why Regulatory Agencies Don’t WorkDesigned to Fail: Why Regulatory Agencies Don’t Work is a great piece about how and why government fails to do its job in regulatory enforcement, written by a veteran U.S. regulator by the name of William Sanjour. Having developed a few regulations myself, I have to say that I completely agree with his observations and concerns. Capture of regulatory agencies in Canada may in fact be worse than in the U.S. There, powerful states like California can drive change at the national level, and NGOs can be backed by billionaires. Not so here. I’ve watched bureaucrats shut out and ignore NGOs, treat unions as the enemy, and call industry executives to get instructions on how to write a regulation.

This quote from the article sums it up well:

“Regulatory agency employees soon learn that drafting and implementing rules for big corporations means making enemies of powerful and influential people. They learn to be “team players,” an ethic that permeates the entire agency without ever being transmitted through written or even oral instructions. People who like to get things done, who need to see concrete results for their efforts, don’t last long. They don’t necessarily get fired, but they don’t advance either; their responsibilities are transferred to others, and they often leave the agency in disgust. The people who get ahead are those clever ones with a talent for procrastination, obfuscation, and coming up with superficially plausible reasons for accomplishing nothing.”

Another example of how our securities regulators work against usMay 7, 2012 by Bill Cara

The CSA is Selling Advanced Access to SEDAR filingsA letter to the Canadian Securities Administrators from Corebox.net

The security commissions of BC, Alberta, Ontario and Quebec, acting collectively as the CSA, are selling advanced access to SEDAR filings, while delaying public access to the same documents.

This is wrong.

The CSA purports to, “promote confidence in the transparent operation of capital markets in Canada”, and to “…[mandate the] full disclosure of information material to investment decisions.”[1]

Public companies in Canada are required by law to file key disclosure documents such as financial statements and 43-101 technical reports on SEDAR. The filings should be released on a fair and equal basis.

Instead, the company that operates SEDAR on behalf of the CSA makes the filings available immediately to resellers like Bloomberg and DisclosureNet and then waits until the following day before making the documents available to the public. The delay in posting new filings to the SEDAR website is unnecessary. It serves only to increase the revenue the CSA receives from the sale of this data.

To make matters worse, the CSA is not being transparent. We couldn't find a single reference on either the SEDAR or CSA websites that describes the advanced sale of SEDAR filings. We discovered the practice when inquiring about becoming a reseller ourselves.

It is hypocritical of the CSA to claim to, “...ensure investors have fair access to market … information …” [1] while ignoring the spirit of security law that aims to provide a level playing field for all investors.Unfortunately, it’s not the only example of the CSA failing to follow its publicly-stated objectives. According to the CSA, SEDAR was developed to “… allow for the public dissemination of Canadian securities information collected in the securities filing process…”.[2] But, SEDAR deliberately prevents Google, Yahoo and other search engines from indexing public company filings. [3]If the CSA were truly interested in the broad and timely dissemination of Canadian securities information, it would allow search engines to index the site. Indexing would provide numerous public benefits including the ability to search for words or phrases within disclosures - instead of simply looking up documents by company name.

Corebox has attempted to get an explanation from the CSA. Our email, sent October 19th, that questions the operation of SEDAR and subsequent phone calls have all been ignored.[4]

We raise this issue for two reasons. First, many public companies go to great lengths to ensure that they disclose information to investors equally. It's not appropriate for the regulator to be negating these good efforts. Second, and more important, the markets rely on investors' goodwill. The CSA should follow their publicly-stated objectives and avoid practices which risk undermining confidence in the regulator.

We call on the CSA to allow internet search engines to index the site, and release SEDAR filings to the public at the same time the documents are made available to its resellers.

Corebox is a provider of interactive analytical tools which help mining investors understand drill results. Our displays, which are available free of charge to the public on Corebox’s website, are graphical representations of drill results disclosed by mining companies.

Footnotes:

1. CSA's publicly-stated mission:"To give Canada a securities regulatory system that protects investors from unfair, improper or fraudulent practices and fosters fair, efficient and vibrant capital markets, by developing a national system of harmonized securities regulation, policy and practice.

The three objectives of securities regulation are:

1. The protection of investors We are here to protect investors from fraudulent, manipulative or misleading practices. We do this by:§ mandating full disclosure of information material to investment decisions§ educating investors about the risks and responsibilities of investing§ authorizing persons who provide investment services to the public and§ supervising market intermediaries.2. Fair, efficient and transparent marketsWe are here to ensure investors have fair access to market facilities and market or price information through regulation that can detect, deter and penalize market manipulation and unfair trading practices.3. The reduction of systemic riskWe aim to reduce the risk of failure of market intermediaries and when it cannot be avoided, we then seek to reduce the impact on investors and other market participants.

2. SEDAR’s stated purpose:"The System for Electronic Document Analysis and Retrieval (SEDAR), is the system that public companies and investment funds use to file public securities documents and information with the Canadian Securities Administrators (CSA). The website, http://www.sedar.com is the official site that provides public access to public company and investment fund profiles and SEDAR public securities filings, together with the latest news about SEDAR. The objective for making this information public is to enhance investor awareness of the business and affairs of public companies and investment funds and to promote confidence in the transparent operation of capital markets in Canada. Achieving this objective relies heavily on the provision of accurate information on market participants."

CDS INC. has operated this website on behalf of the CSA since 1997. SEDAR’s purpose is to:

1. facilitate the electronic filing of securities information as required by the securities regulatory agencies in Canada;2. allow for the public dissemination of Canadian securities information collected in the securities filing process; and3. provide electronic communication between electronic filers, agents and the Canadian securities regulatory agencies"Source: http://www.securities-administrators.ca ... aspx?id=49

3. SEDAR blocks internet search engines from indexing the site using the site’s terms of use which states:

“You may not use: … (b) any robot, spider or other automatic device, software program or manual process to monitor, copy or interfere with any web pages or the content contained thereon on the Web Site…” and;“You acknowledge and agree that you are authorized ... to use the Web Site and the Content for your own personal and non-commercial use only;”Source: http://www.sedar.com/terms_of_use_en.htm

Also, SEDAR's website administrator has uploaded a special file to indicate the site should not be indexed by search engines. The file is designed to be read by computers, but it’s easy to discern its intent. SEDAR’s file says simply disallow all indexing:

SEDAR enforces its terms of use and robots.txt file using a “captcha” code. These numbers and letters are presented in a way that makes them difficult for computers to read. SEDAR filings cannot be read unless the captcha code is entered correctly.

4. Email sent to the Canadian Securities Administrators (CSA) October 19, 2009. Receipt confirmed by phone. (Two typos in the orginal email have been corrected for readability)

"Hello,

I'm writing to inquire whether the Canadian Security Administrators (CSA) has reviewed and approved the business practices of CDS Inc, the company that runs SEDAR.

Specifically, has the CSA approved CDS Inc.'s practice of prohibiting search engines like Google and Yahoo from indexing public company documents on SEDAR? This practice appears at odds with one of the primary goals of the service as stated on SEDAR's home page: “… allow for the public dissemination of Canadian securities information collected in the securities filing process; …”. Indexing by internet search engines is arguably the best way of getting public company documents disseminated.

Further, has the CSA approved CDS Inc.'s practice of making public company documents available immediately to their paid subscribers, like Bloomberg, while delaying the public release of the same documents on SEDAR until the following day. The documents filed on SEDAR disclose information that can include material facts. The practice appears to distort the principles of a fair market whereby all market participants have equal access such documents.

The ASC regularly collaborates with industry participants in manners that are contrary to the public interest.

These actions have knowingly caused hundreds of millions of dollars to be siphoned from taxpayers, from investors, and even from governments, into the hands of financial and investment companies. (the mens rea of this may be indicated in the ASC granting firms permission to violate the law)

Giving non-public, non-transparent permissions to companies to violate the Alberta Securities Act, thousands of times, without public notice or warning to investors in the province.

Allowing persons to represent themselves to the public as being licensed and registered in registration categories for which they are neither, and allowing these persons to thus misrepresent and misinform the public in ways that are damaging to the public interest.

Fostering off Alberta Securities compliance and oversight to non-legislative bodies such as self regulatory agencies, which is at times contrary to the public interest and detrimental to the fairness of the many investors for whom the ASC claims a protective interest over.

Allowing the sale or manufacture of investment products designed to fail, or by corporations with a track record of violating the public interest with investments designed to fail. Allowing these types of persons and corporations to have repeated access to Alberta capital markets, in order to prey upon Albertan’s over and over again.

Using the Alberta Securities Commission as the stamp of regulatory approval, when such confidence in this agency may not be warranted, nor public protection may not be a priority for this crown agency.

We, the undersigned, ask that the newly elected government of Alberta take immediate steps to convene a provincial public inquiry into the activities and public interest failures of the Alberta Securities Commission. This inquiry, to be conducted under the Provincial Inquiries Act to be directed specifically towards the question of regulatory conflicts of interest, regulatory capture, and failure by this regulator to protect the public interest in Alberta.

Such regulatory failures have affected investors in other parts of the world, and the mention of them should come as no surprise to the public. However no body has taken steps to inquire or investigate the systemic causes of these failures here in Alberta and this step must be taken to protect the economy and the people of Alberta from systemic fraud and corruption. If there is no fraud or corruption, then there will be no finding of same and nothing need be hidden. Confidence and trust might thus be restored.

The Ontario Securities Commission is looking far beyond the province’s borders as it formulates a plan for its future approach to regulation.

High-profile proceedings against Chinese companies have forced the commission to confront the challenges of pursuing foreign-based companies, while enforcement initiatives unveiled late last year borrow heavily from measures already in place at regulators internationally.

The OSC is still drafting its strategic plan, but hinted at its future approach in October 2011 with a staff notice that controversially mooted no-contest settlements and whistleblower bounties, among others, as new weapons in its enforcement armoury. Both ideas have a history south of the border at the U.S. Securities and Exchange Commission, where companies have for decades been able to settle without admitting to a breach of securities law, and recent legislation allowed whistleblowers to share in the monetary sanctions it imposes.

While some say the proposals could prove a springboard to strengthened enforcement and increased investor protection in Ontario, others are warning the commission is in danger of overreaching.

Anita Anand, chair of the OSC’s Investor Advisory Panel, says the regulator can learn a lot from its foreign counterparts. “This type of initiative and focus on making enforcement more effective is extremely important. Studying other jurisdictions enhances the quality of the proposal. The investor advisory panel believes that investors in Ontario should be as well protected as they are in other jurisdictions,” she says. “Thus, learning what other jurisdictions are doing is extremely important.”

Susan Hackett, the former general counsel of the Association of Corporate Counsel, says the increasingly global nature of business forces all securities regulators to consider the approach of their foreign counterparts.“You’re going to see an awful lot more handholding on enforcement, because companies are multinational. To regulate them one way in one jurisdiction and another way in every otherjurisdiction doesn’t really make sense,” she says. “And if regulators deem one jurisdiction to have created a best practice, they’re certainly going to examine it and potentially implement it.”

According to Anand, that task may be made more difficult for the OSC by the Supreme Court of Canada’s nixing of the federal government’s attempt to create a national regulator. “Lack of national co-ordination on enforcement is a major drawback of the current system. While the [Canadian Securities Administrators] has been able to ensure co-ordination on prospectus approvals, enforcement is a different story,” she says.

Ed Waitzer, the director of the Hennick Centre for Business and Law at York University and a former chairman of the OSC, says the commission needs to make sure it won’t be spread too thin as a result of any changes it makes. “We have this habit of piling on more and more regulation as opposed to thinking about how they all interact and thinking about what the unintended consequences might be,” he says. “You’ve got to worry about the commission trying to be all things to all people. Let’s not jump on something just because it’s the idea du jour.”

Waitzer has particular concerns over the OSC’s proposed whistleblowing program, which would be a first for Canadian securities regulators. In the October release, the OSC invited comments on a system that would give employees who suspect misconduct in the marketplace a direct line to the regulator, rather than having to go through any internal systems that exist at their companies. The suggested program could include incentives, such as protection from retaliation or financial compensation.

“We’ve spent a lot of time over the last 20 years trying to encourage better corporate governance, and, in effect, self-regulation, by building up compliance cultures. If people are going to end-run the internal culture, where do we end up? It’s going to undermine all that,” Waitzer says. “A bounty encourages all kinds of people to come forward, and I wonder if the commission has the resources to deal with that. They’re going to have a hard enough time doing what they’re supposed to be doing now.”

In May 2011, the SEC created its own Office of the Whistleblower, fulfilling a demand in the Dodd-Frank Wall Street Reform and Consumer Protection Act, passed the previous year by the U.S. Congress. The office takes tips from employees and allows them to claim between 10 and 30 per cent of sanctions imposed by the SEC as a result of the information provided, as long as the penalties are worth at least $1 million in total.

The program has been popular. An SEC report indicates the office received more than 300 whistleblower tips in its first seven weeks of operation. No money has been paid out yet, and it could take a while for tips to translate into payouts.

Hackett, now a law firm consultant at Legal Executive Leadership, spearheaded the fight against the whistleblower provisions of Dodd-Frank during her tenure at the ACC. She says regulators risk becoming buried under an avalanche of speculative tips from employees hoping to hit the jackpot. “Government agencies are going to be investigating thousands and thousands of violations, most of which won’t bear the kind of fruit that most of these laws I think are intended to address,” Hackett says.

In addition, she suggests bounties provide potential whistleblowers with perverse incentives to let wrongdoing develop beyond its early stages in order to maximize their personal payout. In practice, Hackett says the SEC has simply added an unneeded extra layer of bureaucracy, because, after receiving the tip, the regulator processes it and sends it back to the company for investigation. “Now if there actually is a failure, we’ve got potentially months between when that failure was uncovered and the time that the company can begin to address it, and that doesn’t really help anybody.”

Canadian companies such as BMO Financial Group, Royal Bank of Canada, Bell Canada Enterprises, and TD Bank Financial Group signed on to Hackett’s ACC campaign in the U.S., and more Canadian companies have since added their voices to the whistleblower dissent, including George Weston Ltd., the parent company of Loblaw Companies Ltd. and President’s Choice Financial. Robert Balcom, its senior vice president and general counsel, wrote to the OSC to voice his objections to its latest proposals. “Any proposed rules must not allow potential whistleblowers to circumvent an issuer’s internal compliance processes and procedures,” he said, adding that the commission should steer clear of financial rewards and focus on protecting whistleblowers from retribution.

But Dimitri Lascaris, a partner at Siskinds LLP in London, Ont., who has acted for plaintiffs in numerous securities class actions, says corporations are deliberately exaggerating the effect of bounties on compliance structures for their “own self-interest.”

“Bay Street is all up in arms at the idea of compensating whistleblowers because Bay Street understands perfectly well that if you compensate whistleblowers, more people are going to co-operate than would otherwise be the case, and a lot more wrongdoing is going to be exposed,” he says. “A corporation is a very hierarchical entity and to force people who have become aware of senior wrongdoing by management to press the issue only through interaction with senior management or with the board just ignores the reality of how a corporation operates. The first place they should go is to the authorities, rather than be funneled into some internal corporate process which ultimately is going to result in a whitewash.”

According to Lascaris, he’s dealt with dozens of potential whistleblowers who were reluctant to co-operate for fear of retribution. In the event they did co-operate, the beneficiaries were the victims of any fraud, not the whistleblower. “These people are taking risks for no benefit, and they should be rewarded,” he says.

Marian Passmore, the associate director of the Canadian Foundation for Advancement of Investor Rights, sees no reason why an OSC whistleblower program shouldn’t exist in tandem with corporate ones. “Perhaps there’s a benefit to allowing the whistleblower to report where they’re most comfortable doing so,” she says. “If there’s a culture of compliance and ethical behaviour internally, that would encourage more people to report internally.”

Donald DeGrandis is the vice president and corporate secretary at Calgary-based TransCanada Corp. Since the company is listed on the New York Stock Exchange, it’s already subject to the SEC whistleblower rules, and DeGrandis says it has complicated its internal compliance procedure. TransCanada has put a lot of emphasis on its whistleblower system over the last decade, with an internal anonymous hotline, and training for employees around corrupt practices and securities regulation. “To me, it’s a fact of life and just another regulatory oversight we have to live with from now on,” DeGrandis says.

He sees the Dodd-Frank Act as a reaction to corporate scandals in the U.S. and says cases here such as Nortel and Sino-Forest Corp. have helped cultivate the view that securities regulators in Canada need an enforcement boost. “I think the vast majority of companies meet their obligations. It’s the ones that don’t that these rules generally get written for, and knee-jerk reactions always require the good guys who actually follow the rules to do the same as the bad guys who don’t,” DeGrandis says. “I’ve said to our governance committee, that once a whistleblowing regime is up and running in the United States, give it two years and it will be here. I just think it’s an inevitability.”

But Lascaris isn’t so certain the OSC will jump on the whistleblower bandwagon. “To the extent they’re actually looking at it, that’s progress. But I’m skeptical that anything will actually come of it,” he says. “I had hoped that the events of 2008 and 2009 would cause a sea change in attitudes towards enforcement, but I think the OSC and Canadian securities regulators generally have not been sufficiently aggressive over the years, and I don’t sense a dramatic change in the levels or quality of enforcement here.”

Lascaris sees the other major proposal in the October staff notice, the no-contest settlement program, as evidence that the OSC may actually be moving backwards on enforcement. The program would allow protective orders to be made by the OSC without the need for a specific admission of a breach of the Securities Act. The OSC says the program, launched alongside new guidelines for self-reporting and credit for co-operation, is “aimed at resolving enforcement matters more quickly and effectively.” The proposals were prompted in part by settlement negotiations getting bogged down in disputes over admissions, with companies often fearing they will be used against them in concurrent or subsequent civil litigation.

“If you’re willing to settle for less, you can always settle faster, but what’s the benefit if it doesn’t achieve anything meaningful? You’re far better off having more protracted proceedings if it achieves something meaningful,” Lascaris says. “This policy is really one that serves the interests of a small group of well-heeled defendants who actually have the resources to pay compensation to investors.”

The idea drew sharp criticism in a submission to the OSC from Michael Watson, who spent 10 years as its enforcement director. He called no-contest settlements “wrong in principle” and cast doubt on the time and money savings, arguing the majority of settlement efforts go into the wording and that respondents will be just as keen to get that right whether or not they admit to wrongdoing.

In the U.S., where the practice is long-standing, authorities are taking a second look after U.S. federal Judge Jed Rakoff rejected a proposed $285-million settlement between the SEC and Citigroup Global Markets Inc., citing fears over its fairness.

“If the allegations of the complaint are true, this is a very good deal for Citigroup,” he wrote. “Even if they are untrue, it is a mild and modest cost of doing business.”

Lascaris says there’s no evidence no-contest settlements in the U.S. have enhanced deterrence and suggests they may actually weaken it. “The obligation to make admissions is itself a powerful deterrent. It really imposes costs on the person who’s making it, not just for private litigation, but also in reputational terms.”

By handicapping class actions, Anand says no-contest settlements could cut off an avenue that is often the only realistic prospect of restitution for investors. If that is to happen, she’d like to see the OSC opening up new routes for investors. “Alternatives for investor compensation must be considered. Perhaps settlement agreements should require the payment of compensation to investors harmed by the respondent’s misconduct,” she says.

But Waitzer argues it makes sense for the OSC to limit its focus on restitution, especially with the development of a robust securities class action market. “A no-contest settlement doesn’t preclude private enforcement, it just doesn’t hand it to the plaintiffs’ bar on a platter,” he says, adding that the OSC needs to be careful with its limited resources. “There’s certain things that the commission does well and there’s certain things that the courts do well.”

According to Waitzer, the OSC has already been burned by overreach with the explosion of issuers from emerging markets. Suspected fraud at Sino-Forest Corp. and alleged capital market abuse by sportswear company Zungui Xaixi Corp. have left the OSC with an enforcement headache in China. “It’s not just the OSC. The TSX too has been out running up listings, and the OSC is clearing prospectuses,” Waitzer says. “So something goes wrong, and we don’t have in place the necessary co-operation agreements with Chinese regulators, and nobody really understands how you go about getting information from Chinese banks or what the legal regime is to enforce claims there.”

At an event last November, OSC chair Howard Wetston told an audience that an ongoing emerging market issuers review had highlighted a number of challenges for his team. At the same event, he wondered out loud whether the OSC can “effectively enforce the Ontario Securities Act internationally,” reassuring the audience it would “do whatever is reasonable and practical to investigate and take appropriate enforcement action.”

Waitzer would like to see more energy devoted to preventative measures upfront. “We need to think more carefully about what could go wrong ahead of time, and try to address those concerns. I’m not just pointing the finger here at the OSC. It’s the stock exchange, the lawyers, the accountants, all the gatekeepers in the process,” he says.======================

(Commentary by investor advocate, some tongue in cheek , some serious, you decide)Regulating outside our own country.........great idea as it will further help deflect attention away from the largest (yet invisible) criminal actions in Canada and the most profitable to our many interests, “systemic” crime by Canadian insiders.

Re whistleblowers, we think that is a terrible idea, as it has been shown that insiders to the system have the greatest knowledge of financial crime, and if this source were to be tapped, it would seriously compromise our ability to keep financial abuse of Canadians secret from the public.

Re the quote “We’ve spent a lot of time over the last 20 years trying to encourage better corporate governance,”, this should actually say “We’ve spent a lot of time over the last 20 years PRETENDING to encourage better corporate governance,........”

“Canadian companies such as BMO Financial Group, Royal Bank of Canada, Bell Canada Enterprises, and TD Bank Financial Group signed on to Hackett’s ACC campaign in the U.S., and more Canadian companies have since added their voices to the whistleblower dissent.” (of course, the very companies who can skim a billion dollars a week (source http://youtu.be/aNh5laKO22o ) would naturally be opposed to measures that might curtail this flow of money to themselves.

I has to stop reading further at the line quoting “submission to the OSC from Michael Watson...........”, because it was people just like Michael Watson who helped the RCMP IMET close the file on the $35 billion dollar ABCP sub prime mortgage paper sale to vulnerable Canadians. People like Michael Watson who at the time was an enforcement director or former enforcement director at the OSC, which wss the agency who participated in the financial violation of Canadians by allowing these illegal investments to violate our laws to be sold to Canadians. To see a man from the agency that helped commit financial crime on Canadians, then be allowed to help the RCMP in closing the file on the very same crime, is well, a crime in itself. (this might be the very kind of inside information which institutions like this would prefer not come to light) But then this would be the Canadian way, so my arguments begin to fail in a circular fashion. Like water circling a drain, the Canadian financial system is well setup to protect itself and apologize for itself. Probably the best in the developed world today.

Final comment, if securities commissions were allowed to investigate foreign enemies to our markets, it would serve very well the interests of our greatest internal criminals.